Exhibit 10.1
Execution Copy
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT is entered into as of the 14th day of July, 2005,
(the "Effective Date") by and between Emtec, Inc., a Delaware corporation (the
"COMPANY") and Xxxx Xxxxxxx (the "EXECUTIVE"); subject to the condition that
this Agreement will become effective only upon the closing of the transactions
contemplated by that certain Agreement and Plan of Merger (the "MERGER
AGREEMENT") by and among the Company, Emtec Viasub, LLC, a subsidiary of the
Company ("Acquisition") and DARR Westwood Technology Corporation, dated July 14,
2005 (the "CLOSING").
WITNESSETH THAT:
WHEREAS, Executive is a valued employee of the Company;
WHEREAS, the parties desire to enter into this Agreement pertaining to the
employment of the Executive by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below, it is hereby covenanted and agreed by the Executive and the Company
as follows:
1. EMPLOYMENT; POSITION AND RESPONSIBILITIES; TERM.
(a) During the Agreement Term (as defined below), and subject to the terms
of this Agreement, the Executive shall be employed by the Company and shall
occupy the position of President of the Company's Northeast Operations (as
defined below). The Executive agrees to serve in that position or in such other
executive offices or positions with the Company or a Subsidiary (as defined
below), as shall from time to time be determined by the Board of Directors (the
"BOARD"). The Executive represents that his employment with the Company does not
violate any other agreement to which he is a party.
(b) During the Agreement Term, the Executive shall report solely and
directly to the Chief Executive Officer of the Company or his designee.
(c) During the Agreement Term, while employed by the Company, the Executive
shall devote his full time and best efforts to the business of the Company and
shall perform all duties and services for and on behalf of the Company as shall
be reasonably requested by the Board in its sole and absolute discretion. The
Executive's duties may include providing executive services for both the Company
and the Subsidiaries, as determined by the Board.
(d) During the Agreement Term, the Company shall use its reasonable best
efforts to maintain an office within 15 miles of Chatham, New Jersey.
(e) The term of employment under this Agreement shall commence on the
Effective Date and, unless earlier terminated under Section 3 below, shall
terminate on August 31, 2008 (the "AGREEMENT TERM"). Thereafter, the Agreement
Term may be extended annually for additional one-year periods with the mutual
consent of the Company and the Executive.
(f) For purposes of this Agreement:
(i) The term "SUBSIDIARY" shall mean any corporation, partnership,
joint venture or other entity during any period in which at least a 50%
interest in such entity is owned, directly or indirectly, by the Company
(or a successor to the Company).
(ii) The term "NORTHEAST OPERATIONS" means the regions designated as
comprising the Company's Northeast Operations, including any additional
regions, business lines or acquisitions that may become included in the
Company's Northeast Operations after the Effective Date. The Company may
give the Executive authority and responsibility with respect to such
additional regions, business lines or acquisitions as it determines in its
reasonable judgment are appropriate, and target EBITDA levels may be
adjusted with the mutual consent of the Company and the Executive to
account for such additional regions, business lines or acquisitions.
2. COMPENSATION AND OTHER BENEFITS.
(a) BASE SALARY. During the Agreement Term, the Executive shall receive an
annual base salary ("BASE Salary"), payable in accordance with the Company's
normal payroll practices, of $230,000. The Board shall increase such Base Salary
by 5% as of each anniversary of the Effective Date during the Agreement Term.
(b) BONUS. In respect of each fiscal year during the Agreement Term,
beginning with the fiscal year ending August 31, 2006, the Executive shall be
eligible to receive a Level 1 Bonus and a Level 2 Bonus (as defined below)
provided that the performance goals set forth below are met. The foregoing shall
be referred to collectively as the "BONUS." 75% of the Bonus (if any) shall be
paid within 100 days after the end of the applicable fiscal year and the
remaining 25% of the Bonus (if any) shall be paid within 10 business days after
the Company's audited (or if no audit is done for the fiscal year, the reviewed
or compiled) financial statements for the applicable fiscal year are completed.
(i) LEVEL 1 BONUS. The Executive shall be entitled to receive an
annual bonus of $100,000 (the "LEVEL 1 BONUS") if the Company's EBITDA for
the applicable fiscal year equals or exceeds the following targets:
(A) for the fiscal year beginning on September 1, 2005 and ending
August 31, 2006, $3,700,000;
(B) for the fiscal year beginning on September 1, 2006 and ending
August 31, 2007, $4,000,000; and
(C) for the fiscal year beginning on September 1, 2007 and ending
August 31, 2008, $4,800,000.
If the Company's EBITDA for the applicable fiscal year is more than 80% but
less than 100% of the applicable target for that year, the Executive shall
be entitled to receive 25% of the Level 1 Bonus (i.e., $25,000) plus a
portion of 75% of the Level 1 Bonus (i.e., $75,000) equal to $75,000
multiplied by a fraction (not to exceed one), the numerator of which is the
amount by which the Company's EBITDA for the applicable fiscal year exceeds
80% of the applicable target for that fiscal year and the denominator of
which is 20% of the applicable target for that fiscal year (the difference
between 80% and 100% of the applicable target for the fiscal year). If the
Company's EBITDA for the applicable fiscal year is 80% of the applicable
target for that fiscal year, the Executive shall be entitled to receive 25%
of the Level 1 Bonus (i.e., $25,000). If the Company's EBITDA for the
applicable fiscal year is less than 80% of the applicable target for that
year, no Level 1 Bonus shall be payable. No Level 1 Bonus shall be payable
for fiscal years ending after August 31, 2008.
(ii) LEVEL 2 BONUS.
(A) The Executive shall be entitled to receive an annual bonus of
up to .40 multiplied by his Base Salary (the "NORTHEAST LEVEL 2
BONUS") upon the achievement of the following targets by the Northeast
Operations:
(1) If the portion of the Company's EBITDA allocable to the
Northeast Operations (the "NORTHEAST OPERATIONS EBITDA") for the
fiscal year beginning on September 1, 2005 and ending on August
31, 2006 equals or exceeds $1,850,000 (the "YEAR 1 NORTHEAST
TARGET EBITDA"), the Executive shall be entitled to receive a
portion of the Northeast Level 2 Bonus equal to the Northeast
Level 2 Bonus multiplied by a fraction (not to exceed one), the
numerator of which shall be the amount by which the Northeast
Operations EBITDA for the fiscal year
exceeds $1,850,000 and the denominator of which is $650,000 (the
difference between $1,850,000 and $2,500,000).
(2) If the Northeast Operations EBITDA for the fiscal year
beginning on September 1, 2006 and ending on August 31, 2007
equals or exceeds $2,000,000 (the "YEAR 2 NORTHEAST TARGET
EBITDA"), the Executive shall be entitled to receive a portion of
the Northeast Level 2 Bonus equal to the Northeast Level 2 Bonus
multiplied by a fraction (not to exceed one), the numerator of
which shall be the amount by which the Northeast Operations
EBITDA for the fiscal year exceeds $2,000,000 and the denominator
of which is $1,000,000 (the difference between $2,000,000 and
$3,000,000).
(3) If the Northeast Operations EBITDA for the fiscal year
beginning on September 1, 2007 and ending on August 31, 2008
equals or exceeds $2,400,000 (the "YEAR 3 NORTHEAST TARGET
EBITDA"), the Executive shall be entitled to receive a portion of
the Northeast Level 2 Bonus equal to the Northeast Level 2 Bonus
multiplied by a fraction (not to exceed one), the numerator of
which shall be the amount by which the Northeast Operations
EBITDA for the fiscal year exceeds $2,400,000 and the denominator
of which is $1,200,000 (the difference between $2,400,000 and
$3,600,000).
(4) If the Northeast Operations EBITDA for the applicable
year is less than the applicable Northeast Target EBITDA for the
fiscal year, no Northeast Level 2 Bonus shall be payable.
(B) The Executive shall be entitled to receive an annual bonus of
up to .10 multiplied by his Base Salary (the "SOUTHEAST LEVEL 2
BONUS") upon the achievement of the following targets by the Southeast
Operations:
(1) If the portion of the Company's EBITDA allocable to the
Southeast Operations (the "SOUTHEAST OPERATIONS EBITDA") for the
fiscal year beginning on September 1, 2005 and ending on August
31, 2006 equals or exceeds $1,850,000 (the "YEAR 1 SOUTHEAST
TARGET EBITDA"), the Executive shall be entitled to receive a
portion of the Southeast Level 2 Bonus equal to the Southeast
Level 2 Bonus multiplied by a fraction (not to exceed one), the
numerator of which shall be the amount by which the Southeast
Operations EBITDA for the fiscal year exceeds $1,850,000 and the
denominator of which is $650,000 (the difference between
$1,850,000 and $2,500,000).
(2) If the Southeast Operations EBITDA for the fiscal year
beginning on September 1, 2006 and ending on August 31, 2007
equals or exceeds $2,000,000 (the "YEAR 2 SOUTHEAST TARGET
EBITDA"), the Executive shall be entitled to receive a portion of
the Southeast Level 2 Bonus equal to the Southeast Level 2 Bonus
multiplied by a fraction (not to exceed one), the numerator of
which shall be the amount by which the Southeast Operations
EBITDA for the fiscal year exceeds $2,000,000 and the denominator
of which is $1,000,000 (the difference between $2,000,000 and
$3,000,000).
(3) If the Southeast Operations EBITDA for the fiscal year
beginning on September 1, 2007 and ending on August 31, 2008
equals or exceeds $2,400,000 (the "YEAR 3 SOUTHEAST TARGET
EBITDA"), the Executive shall be entitled to receive a portion of
the Southeast Level 2 Bonus equal to the Southeast Level 2 Bonus
multiplied by a fraction (not to exceed one), the numerator of
which shall be the amount by which the Southeast Operations
EBITDA for the fiscal year exceeds $2,400,000 and the denominator
of which is $1,200,000 (the difference between $2,400,000 and
$3,600,000).
(4) If the Southeast Operations EBITDA for the applicable
year is less than the applicable Southeast Target EBITDA for the
fiscal year, no Southeast Level 2 Bonus shall be payable.
For illustrative purposes, attached hereto as EXHIBIT A is a spreadsheet
depicting the Level 2 Bonus calculation mechanics of this Section 2(b)(ii).
(iii) As used herein, the "EBITDA" for a fiscal year shall mean the
sum of (A) consolidated net income for such fiscal year, PLUS (B) provision
for income taxes of the Company during such fiscal year, PLUS (C)
depreciation and amortization expense of the Company accrued during such
fiscal year (but only to the extent not included in interest expense), PLUS
(D) net interest expense during such fiscal year, determined in accordance
with U.S. generally accepted accounting principles in effect of the date of
this Agreement and using a reasonable methodology for allocating corporate
costs.
(iv) The term "SOUTHEAST OPERATIONS" means the regions designated as
comprising the Company's Southeast Operations, including any additional
regions, business lines or acquisitions, that may become included in the
Company's Southeast Operations after the Effective Date. Target EBITDA
levels may be adjusted by the Company to account for such additional
regions, business lines or acquisitions.
(c) EMPLOYEE BENEFITS. During the Agreement Term, the Executive shall be
entitled to participate on the same basis as the other executive employees of
the Company, in any pension, retirement, savings, medical, disability or other
welfare benefit plans maintained by the Company immediately prior to the
Closing, in accordance with the terms thereof, and as the same may be amended
and in effect from time to time.
(d) EXPENSE REIMBURSEMENT. During the Agreement Term, the Company shall
reimburse the Executive for all out-of-pocket travel, lodging, meal and other
reasonable expenses incurred by him in connection with his performance of
services hereunder, upon submission of appropriate evidence, in accordance with
the Company's policy, of the incurrence and purpose of each such expense and
otherwise in accordance with the Company's business travel and expense
reimbursement policy as in effect from time to time.
(e) VACATION. During the Agreement Term, Executive shall be entitled to
four weeks of paid vacation on an annualized basis. Vacation shall be prorated
for part of a year worked. Such vacation shall be taken at such times as shall
be approved by the Company, in the reasonable exercise of its discretion.
(f) AUTOMOBILE ALLOWANCE. During the Agreement Term, the Executive shall be
entitled to an automobile allowance of $15,000 per year, payable in equal
monthly installments. During the Agreement Term, the Company shall also
reimburse the Executive, after receipt of appropriate documentation, for all
reasonable costs of maintaining the automobile acquired by the Executive
pursuant to such allowance, including, but not limited to, the costs of repair,
maintenance, insurance, registration and fuel.
(g) LIFE AND DISABILITY INSURANCE COVERAGE ALLOWANCE. During the Agreement
Term, the Executive shall be entitled to an annual cash allowance in the pre-tax
amount of $12,000, which the Executive shall use to (I) maintain present life
insurance coverage or purchase replacement life insurance coverage in the amount
of $1,000,000 and (II) purchase individual disability insurance coverage.
(h) OTHER PERQUISITES. During the Agreement Term:
(i) The Company shall provide the Executive with a monthly cash
allowance of $500.
(ii) The Executive shall be entitled to travel business class for all
of his international business travel and coach class for all of his
domestic business travel, and he shall be entitled to use any airline miles
earned through his business travel to upgrade to first class.
3. TERMINATION OF EMPLOYMENT. The Executive's employment with the Company
during the Agreement Term may be terminated by the Company or the Executive
without breach of this Agreement only as provided in this Section 3.
(a) TERMINATION DUE TO DISABILITY. The Executive's employment hereunder may
be terminated by the Company in the event of the Executive's Disability (as
defined below). For purposes of this Agreement, "DISABILITY" shall mean a
physical or mental disability that prevents or is reasonably expected to prevent
the performance by the Executive of his duties hereunder for (X) a continuous
period of 90 days or longer or (Y) 120 days or more over any 365 day period
whether or not continuous. The determination of the Executive's Disability shall
(I) be made by an independent physician selected by the Company and the
Executive (provided that if the Executive and the Company cannot agree as to
such an independent physician, each shall appoint one physician and those two
physicians shall appoint a third physician who shall make such determination),
(II) be final and binding on the parties hereto and (III) be made taking into
account such competent medical evidence as shall be presented to such
independent physician by the Executive and/or the Company or by any physician or
group of physicians or other competent medical experts employed by the Executive
and/or the Company to advise such independent physician.
(b) TERMINATION DUE TO DEATH. The Executive's employment hereunder shall
terminate upon the Executive's death.
(c) TERMINATION BY THE COMPANY FOR CAUSE. The Company may immediately
terminate the Executive's employment hereunder at any time for Cause (as defined
below). "CAUSE" shall mean (I) the continued failure of the Executive
substantially to perform his duties hereunder or his negligent performance of
such duties (other than any such failure due to the Executive's physical or
mental illness), (II) the Executive having engaged in misconduct that has caused
or is reasonably expected to result in material injury to the Company or any of
its Subsidiaries, (III) a material violation by the Executive of a Company
policy, (IV) the breach by the Executive of any of his material obligations
hereunder or under any other written agreement or covenant with the Company or
any of its Subsidiaries, (V) material failure by the Executive to timely comply
with a lawful direction or instruction given to him by the Board or the Chief
Executive Officer, (VI) the Executive having been convicted of, or entering a
plea of guilty or nolo contendere to, a crime that constitutes a felony or a
misdemeanor involving moral turpitude (or comparable crime in any jurisdiction
that uses a different nomenclature) , including any offense involving dishonesty
as such dishonesty relates to the Company's assets or business or the theft of
Company property and (VII) the Executive's insobriety or use of illegal drugs,
chemicals or controlled substances either (A) in the course of performing the
Executive's duties and responsibilities under this Agreement, or (B) otherwise
affecting the ability of the Executive to perform the same. In the event of
litigation concerning the Company's termination of Executive for Cause, the
Company shall prove that it terminated the Executive for Cause by a standard of
clear and convincing evidence. In the case of a termination for Cause as
described in clauses (i), (ii), (iii), (iv) and (v) of this Section, the Board
or the Chief Executive Officer, as applicable, shall give the Executive written
notice of its or his intention to terminate him for Cause, such notice to state
in detail the particular circumstances that constitute the grounds on which the
proposed termination for Cause is based. The Executive shall have ten (10) days,
after receiving such special notice, to cure such grounds, to the extent such
cure is possible. If he fails to cure such grounds to the Board's reasonable
satisfaction, the Executive shall thereupon be terminated for Cause.
(d) TERMINATION BY COMPANY WITHOUT CAUSE. The Company may terminate the
Executive's employment hereunder at any time Without Cause (as defined below) by
giving the Executive prior written Notice of Termination (as defined below),
which notice shall be effective immediately, or at such later time as specified
in such notice. A termination "WITHOUT CAUSE" shall mean a termination of the
Executive's employment by the Company other than as a result of his Disability
or for Cause. Notwithstanding the foregoing provisions of this Section 3(d), if
the Executive's employment is terminated by the Company in accordance with this
Section 3(d) and, within a reasonable time period thereafter, it is determined
by the Board that circumstances existed which would have constituted a basis for
termination of the Executive's employment for Cause in accordance with Section
3(c), the Executive's employment will be deemed to have been terminated for
Cause in accordance with Paragraph 3(c).
(e) VOLUNTARY TERMINATION. The Executive may terminate his employment
hereunder at any time by giving the Company prior written Notice of Termination
at least 90 days prior to such termination; provided that the Board may, in its
sole discretion, terminate the Executive's employment hereunder prior to the
expiration of the 90-day notice period. In such event and upon the expiration of
such 90-day period (or such shorter time as the Board in its sole discretion may
determine), the Executive's employment hereunder shall immediately and
automatically terminate.
(f) NOTICE OF TERMINATION. Any termination of the Executive's employment by
Company or the Executive, other than a termination due to the Executive's death,
shall be communicated by a written Notice of Termination addressed to the
appropriate party. A "NOTICE OF TERMINATION" shall mean a notice that indicates
the Date of Termination (as defined below), which shall not be earlier than the
date on which the notice is provided, which indicates the specific termination
provision in this Agreement relied on and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive's employment under the provision so indicated.
(g) For purposes of this Agreement, the "DATE OF TERMINATION" is the last
day that the Executive is employed by the Company, provided the Executive's
employment is terminated in accordance with the foregoing provisions of this
Section 3.
(h) RESIGNATION UPON TERMINATION. As of the Date of Termination, the
Executive shall resign, in writing, from all positions then held by him with the
Company and its Subsidiaries.
(i) CESSATION OF PROFESSIONAL ACTIVITY. Upon delivery of a Notice of
Termination by any party, the Company may relieve the Executive of his
responsibilities and require the Executive to immediately cease all professional
activity on behalf of the Company. In addition, in the event that the Board
determines that there is a reasonable basis for it to investigate whether
circumstances exist that would, if true, permit the Board to terminate the
Executive's employment for Cause, the Board may relieve the Executive of his
responsibilities during the pendency of such investigation.
4. PAYMENTS UPON CERTAIN TERMINATIONS.
(a) GENERAL. If, during the Agreement Term, the Executive's employment
terminates for any reason, the Executive (or his estate, beneficiary or legal
representative) shall be entitled to receive the following:
(i) any earned or accrued but unpaid Base Salary through the Date of
Termination (including, except in the case of a termination for Cause, with
respect to unused vacation time);
(ii) all amounts payable and benefits accrued under any otherwise
applicable plan, policy, program or practice of the Company (other than
relating to severance) in which the Executive was a participant during his
employment with Company in accordance with the terms thereof; provided that
the foregoing shall not be construed as requiring the Executive to be
treated as employed by the Company for purposes of any employee benefit
plan or arrangement following the date of the Executive's Date of
Termination except as otherwise expressly provided in this Agreement or
required by law; and
(iii) in the case of any termination of employment Without Cause, (A)
any earned but unpaid Bonus with respect to any fiscal year of the Company
ending prior to the Date of Termination and (B) provided Executive executes
and delivers a general release of all claims in form and substance
satisfactory to the Company, (1) his Base Salary, at the rate in effect
hereunder immediately prior to the Date of Termination, which shall be
payable in installments on Company's regular payroll dates, until August
31, 2008 and (2) a pro-rata Bonus payment for the fiscal year of the
Executive's Date of Termination, equal to the Bonus that the Executive
would have been entitled to if he had remained employed by the Company at
the end of such fiscal year multiplied by a fraction, the numerator of
which is the number of days transpired in the fiscal year up to and
including the
Date of Termination, and the denominator of which is 365, which shall be
payable at the time provided in Section 2(b).
(b) TERMINATION DUE TO DEATH OR DISABILITY. If, during the Agreement
Term, the Executive dies or the Company terminates the Executive's
employment hereunder due to his Disability, the Executive (or his estate,
beneficiary or legal representative) shall be entitled to receive, in
addition to the payments and benefits described in Section 4(a)(i) and
Section 4(a)(ii) above, (A) any earned but unpaid Bonus with respect to any
fiscal year of the Company ending prior to the Date of Termination, (B) his
Base Salary, at the rate in effect hereunder immediately prior to the Date
of Termination, which shall be payable in installments on Company's regular
payroll dates, until August 31, 2008 and (C) a pro-rata Bonus payment for
the fiscal year of the Executive's death or Disability, equal to the Bonus
that the Executive would have been entitled to if he had remained employed
by the Company at the end of such fiscal year multiplied by a fraction, the
numerator of which is the number of days transpired in the fiscal year up
to and including the Date of Termination, and the denominator of which is
365, which shall be payable at the time provided in Section 2(b).
(c) NO OTHER OBLIGATIONS. If the Executive's Date of Termination
occurs during the Agreement Term under any circumstances described in
Section 3, the Company shall have no obligation to make payments under the
Agreement for periods after the Executive's Date of Termination other than
those payments in accordance with Sections 4(a) and 4(b) above.
(d) PAYMENT. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled under this Section 4,
shall be made as soon as is administratively feasible following the Date of
Termination.
5. DUTIES ON TERMINATION. Subject to the terms and conditions of this
Agreement, to the extent that there is a period of time elapsing between the
date of delivery of a Notice of Termination, and the Date of Termination, the
Executive shall continue to perform his duties as set forth in this Agreement
during such period, and shall also perform such services for the Company as are
necessary and appropriate for a smooth transition to the Executive's successor,
if any. Notwithstanding the foregoing provisions of this Section 5, the Company
may suspend the Executive from performing his duties under this Agreement
following the delivery of a Notice of Termination providing for the Executive's
resignation, or delivery by the Company of a Notice of Termination providing for
the Executive's termination of employment for any reason; provided, however,
that during the period of suspension (which shall end on the Date of
Termination), the Executive shall continue to be treated as employed by the
Company for other purposes, and his rights to compensation or benefits shall not
be reduced by reason of the suspension.
6. RESTRICTIVE COVENANTS.
(a) NONCOMPETITION.
(i) During the Agreement Term, and for a period ending on the later of
(I) the fifth anniversary of the Effective Date or (II) two years after
termination of the Executive's employment with the Company (the
"RESTRICTIVE PERIOD"):
(A) The Executive shall not, without the express written consent
of the Board, be employed by, serve as a consultant to, or otherwise
assist or directly or indirectly provide services to a Competitor (as
defined below) if: (1) such services are to be provided with respect
to any location in which the Company or a Subsidiary does business, or
with respect to any location in which the Company or a Subsidiary has
devoted material resources to doing business; or (2) the trade
secrets, confidential information, or proprietary information
(including, without limitation, confidential or proprietary methods)
of the Company and the Subsidiaries to which the Executive had access
could reasonably be expected to benefit the Competitor if the
Competitor were to obtain access to such secrets or information.
(B) The Executive shall not, without the express written consent
of the Board, directly or indirectly own an equity interest in any
Competitor (other than ownership of 1% or less of the outstanding
stock of any corporation listed on a national stock exchange or
included in the NASDAQ System).
(C) The Executive shall not, without the express written consent
of the Board, solicit or attempt to solicit any party who is then or,
during the twelve-month period prior to such solicitation or attempt
by the Executive was (or was solicited to become), a customer or
supplier of the Company or a Subsidiary, or a user of the services
provided by the Company or a Subsidiary.
(D) The Executive shall not without the express written consent
of the Board, solicit, entice, persuade, induce or hire any individual
who is employed by the Company or any Subsidiary (or was so employed
within 90 days prior to the Executive's action) to terminate or
refrain from renewing or extending such employment or to become
employed by or enter into contractual relations with any other
individual or entity other than the Company or any Subsidiary, and the
Executive shall not approach any such employee for any such purpose or
authorize or knowingly
cooperate with the taking of any such actions by any other individual
or entity.
(ii) The term "COMPETITOR" means any enterprise (including a person,
entity, firm or business, whether or not incorporated) during any period in
which it is engaged in or aiding others to conduct business that engages
in, or plans to engage in, any line of business that the Company or its
Subsidiaries engages in or has made plans to engage in during the Agreement
Term, or within the prior 12 months was engaged in, or otherwise competes,
directly or indirectly, with the Company or any of its Subsidiaries.
(b) NON-DISPARAGEMENT. The Executive and the Company agree that each will
not make any false, defamatory or disparaging statements about the other, the
Subsidiaries, or the officers or directors of the Company or the Subsidiaries
that are reasonably likely to cause material damage to the Executive, the
Company, the Subsidiaries, or the officers or directors of the Company or the
Subsidiaries.
(c) CONFIDENTIAL INFORMATION. The Executive agrees that, during the
Agreement Term, and at all times thereafter:
(i) The Executive agrees to keep secret all Confidential Information
(as defined below) and Intellectual Property (as defined below) which may
be obtained during the period of employment by the Company and that the
Executive shall not reveal or disclose it, directly or indirectly, except
with the Company's prior written consent. The Executive shall not make use
of the Confidential Information or Intellectual Property for the
Executive's own purposes or for the benefit of anyone other than the
Company and shall protect it against disclosure, misuse, espionage, loss
and theft.
(ii) The Executive acknowledges and agrees that all Intellectual
Property is and shall be owned by the Company. The Executive hereby assigns
and shall assign to all ownership rights possessed in any Intellectual
Property contributed, conceived or made by the Executive (whether alone or
jointly with others) while employed by the Company, whether or not during
work hours. The Executive shall promptly and fully disclose to the Company
in writing all such Intellectual Property after such contribution,
conception or other development. The Executive agrees to fully cooperate
with the Company, at the Company's expense, in securing, enforcing and
otherwise protecting throughout the world the Company's interests in such
Intellectual Property, including, without limitation, by signing all
documents reasonably requested by the Company.
(iii) Immediately following the Date of Termination, the Executive
agrees to promptly deliver to the Company all memoranda, notes, manuals,
lab
notebooks, computer diskettes, passwords, encryption keys, electronic mail
and other written or electronic records (and all copies thereof)
constituting or relating to Confidential Information or Intellectual
Property that the Executive may then possess or have control over. The
Executive shall provide written certification that all such materials have
been returned.
(iv) For purposes of this Agreement, the following terms shall be
defined as set forth below:
(A) "CONFIDENTIAL INFORMATION" shall mean all information, in any
form or medium, that relates to the business, suppliers and
prospective suppliers, existing and potential creditors and financial
backers, marketing, costs, prices, products, processes, services,
methods, computer programs and systems, personnel, customers, research
or development of the Company and the Subsidiaries and all other
information related to the Company and the Subsidiaries which is not
readily available to the public. Confidential Information shall
include any of the foregoing information that is created or developed
by the Executive during the Agreement Term.
(B) "INTELLECTUAL PROPERTY" shall mean, with respect to the
following which are created or existing during the period of the
Executive's employment by the Company, any: (1) idea, know-how,
invention, discovery, design, development, software, device,
technique, method or process (whether or not patentable or reduced to
practice or including Confidential Information) and related patents
and patent applications and reissues, re-examinations, renewals,
continuations-in-part, continuations, and divisions thereof; (2)
copyrightable and mask work (whether or not including Confidential
Information) and related registrations and applications for
registration; (3) trademarks, trade secrets and other proprietary
rights; and (4) improvements, updates and modifications of the
foregoing made from time to time. Intellectual Property shall include
any of the foregoing that is created or developed by the Executive
during the Agreement Term.
(d) DUTY OF LOYALTY TO COMPANY. Nothing in this Section 6 shall be
construed as limiting the Executive's duty of loyalty to the Company, or any
other duty otherwise owed to the Company, while the Executive is employed by the
Company.
7. ASSISTANCE WITH CLAIMS. The Executive agrees that, during the Agreement
Term, and continuing for a reasonable period after the Executive's Date of
Termination, the Executive will assist the Company and the Subsidiaries in
defense of any claims that may be made against the Company and the Subsidiaries,
and will assist the Company and the Subsidiaries in the prosecution of any
claims that may be made by the Company or the
Subsidiaries, to the extent that such claims may relate to services performed by
the Executive for the Company and the Subsidiaries. The Executive agrees to
promptly inform the Company upon becoming aware of any lawsuits involving such
claims that may be filed against the Company or any Subsidiary. The Company
agrees to provide legal counsel to the Executive in connection with such
assistance (to the extent legally permitted), and to reimburse the Executive for
all of the Executive's reasonable out-of-pocket expenses associated with such
assistance, including travel expenses. For periods after the Executive's
employment with the Company terminates, the Company agrees to provide reasonable
compensation to the Executive for such assistance. To the extent permitted by
law, the Executive also agrees to promptly inform the Company upon being asked
to assist in any investigation of the Company or the Subsidiaries (or their
actions) that may relate to services performed by the Executive for the Company
or the Subsidiaries, regardless of whether a lawsuit has then been filed against
the Company or the Subsidiaries with respect to such investigation.
8. DISCLOSURE OF AGREEMENT. The Executive shall provide each of his subsequent
employers during the one-year period following the end of Agreement Term with a
copy of the restrictive covenants set forth in Section 6 of this Agreement in
order to allow such subsequent employers to avoid inadvertently causing the
violation of such covenants. The Executive shall advise the Company of the
identity of each of his subsequent employers during the one-year period
following the end of the Agreement Term.
9. INJUNCTIVE RELIEF WITH RESPECT TO COVENANTS; CERTAIN ACKNOWLEDGMENTS; ETC.
(a) INJUNCTIVE RELIEF. The Executive acknowledges and agrees that the
covenants, obligations and agreements of Executive contained in Section 6 relate
to special, unique and extraordinary matters and that a violation of any of the
terms of such covenants, obligations or agreements will cause the Company
irreparable injury for which adequate remedies are not available at law.
Therefore, the Executive agrees that the Company shall be entitled to an
injunction, restraining order or such other equitable relief (without the
requirement to post bond unless required by applicable law) as a court of
competent jurisdiction may deem necessary or appropriate to restrain the
Executive from committing any violation of such covenants, obligations or
agreements. These injunctive remedies are cumulative and in addition to any
other rights and remedies the Company may have. The Company shall be entitled to
collect from the Executive any costs of obtaining injunctive relief, including,
without limitation, attorneys' fees.
(b) BLUE PENCIL. If any court of competent jurisdiction shall at any time
deem the Restrictive Period too lengthy, the other provisions of Section 6(a)
shall nevertheless stand and the Restrictive Period herein shall be deemed to be
the longest period permissible by law under the circumstances. The court shall
reduce the time period to permissible duration or size.
(c) CERTAIN ACKNOWLEDGEMENTS. The Executive acknowledges and agrees that
the Executive will have a prominent role in the management of the business, and
the development of the goodwill, of the Company and its Subsidiaries and will
establish and develop relations and contacts with the principal customers and
suppliers of the Company and its Subsidiaries in the United States of America
and the rest of the world, all of which constitute valuable goodwill of, and
could be used by the Executive to compete unfairly with, the Company and its
Subsidiaries and that (I) in the course of his employment with the Company, the
Executive will obtain confidential and proprietary information and trade secrets
concerning the business and operations of the Company and its Subsidiaries in
the United States of America and the rest of the world that could be used to
compete unfairly with the Company and its Subsidiaries; (II) the covenants and
restrictions contained in Section 6 are intended to protect the legitimate
interests of the Company and its Subsidiaries in their respective goodwill,
trade secrets and other confidential and proprietary information; (III) the
Executive desires and agrees to be bound by such covenants and restrictions; and
(IV) the compensation to be provided to the Executive are adequate consideration
for the restrictive covenants provided in Section 6.
10. MISCELLANEOUS.
(a) BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the Company, and its respective successors and assigns.
This Agreement shall also be binding on and inure to the benefit of the
Executive and his heirs, executors, administrators and legal representatives.
This Agreement shall not be assignable by the Executive without the prior
written consent of the Company.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement among
the parties hereto concerning the subject matter hereof and supercedes all prior
and contemporaneous correspondence and proposals (including but not limited to
summaries of proposed terms) and all prior and contemporaneous promises,
representations, understandings, arrangements and agreements, if any, concerning
such subject matter (including but not limited to those made to or with the
Executive by any other person); provided, however, that nothing in this
Agreement shall be construed to limit any policy or agreement that is otherwise
applicable relating to confidentiality, rights to inventions, copyrightable
material, business and/or technical information, trade secrets, solicitation of
employees, interference with relationships with other businesses, competition,
and other similar policies or agreement for the protection of the business and
operations of the Company and the Subsidiaries.
(c) APPLICABLE LAW. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the laws of the State of
Delaware without giving effect to the conflict of laws rules of any state.
(d) CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL; ATTORNEYS FEES.
(i) CONSENT TO JURISDICTION. Each party hereby irrevocably submits to
the jurisdiction of the courts of the State of Delaware and the federal
courts of the United States of America located in the State of Delaware
solely in respect of the interpretation and enforcement of the provisions
of this Agreement and of the documents referred to in this Agreement, and
in respect of the transactions contemplated hereby and thereby. Each party
hereby waives and agrees not to assert, as a defense in any action, suit or
proceeding for the interpretation and enforcement hereof, or any such
document or in respect of any such transaction, that such action, suit or
proceeding may not be brought or is not maintainable in such courts or that
the venue thereof may not be appropriate or that this Agreement or any such
document may not be enforced in or by such courts. Each party hereby
consents to and grants any such court jurisdiction over the person of such
parties and over the subject matter of any such dispute and agree that the
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 10(j) or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.
(ii) WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR
VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. Each party certifies and acknowledges that (I) no
representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (II) each such party
understands and has considered the implications of this waiver, (III) each
such party makes this waiver voluntarily, and (IV) each such party has been
induced to enter into this agreement by, among other things, the mutual
waivers and certifications in this Section 10(d)(ii).
(e) TAXES. The Company may withhold from any payments made under this
Agreement all applicable taxes, including but not limited to income, employment
and social insurance taxes, as shall be required by law.
(f) KEY MAN INSURANCE. The Executive acknowledges that the Company may
purchase "key man" insurance on his life and hereby agrees to cooperate with the
Company in obtaining such insurance, including without limitation, submitting to
such medical examinations as may be required promptly upon request by the
Company.
(g) AMENDMENTS. This Agreement may be amended or cancelled only by mutual
agreement of the parties in writing. So long as the Executive lives, no person,
other than the parties hereto, shall have any rights under or interest in this
Agreement or the subject matter hereof.
(h) SEVERABILITY. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
(i) WAIVER OF BREACH. No waiver by any party hereto of a breach of any
provision of this Agreement by any other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party of any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
(j) SURVIVAL OF AGREEMENT. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive's employment with the Company.
(k) NOTICES. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given:
(i) in the case of delivery by overnight service with guaranteed next
day delivery, the next day or the day designated for delivery;
(ii) in the case of certified or registered U.S. mail, five days after
deposit in the U.S. mail; or
(iii) in the case of facsimile, the date upon which the transmitting
party received confirmation of receipt by facsimile, telephone or
otherwise;
provided, however, that in no event shall any such communications be deemed to
be given later than the date they are actually received. Communications that are
to be delivered by the U.S. mail or by overnight service or two-day delivery
service are to be delivered to the addresses set forth below:
to the Company:
Emtec, Inc.
000 Xxxxxxxxx Xxxx, Xxxx. #0
Xxxxxxx, XX 00000
Facsimile number: 609.587.1930
or to the Executive:
at address in Company's records.
All notices to the Company shall be directed to the attention of Secretary
of the Company, with a copy to the Board. Each party, by written notice
furnished to the other party, may modify the applicable delivery address, except
that notice of change of address shall be effective only upon receipt.
(l) HEADINGS. The section and other headings contained in this Agreement
are for the convenience of the parties only and are not intended to be a part
hereof or to affect the meaning or interpretation hereof.
(m) COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Company has duly executed this Agreement by its
authorized representative, and the Executive has hereunto set his hand, in each
case effective as of the date first above written.
EMTEC, INC.
By: /s/
---------------------------------
Name:
Title:
EXECUTIVE
/s/
------------------------------------
Xxxx Xxxxxxx
EXHIBIT A
ILLUSTRATION OF LEVEL 2 BONUS CALCULATION
Assume that Xxxxxxxxx Xxxxxx 00, 0000 XXXXXX was $2,300,000.
Target EBITDA $1,850,000
Maximum EBITDA $2,500,000
Change EBITDA $650,000 ($2,500,000-$1,850,000)
Actual EBITDA $2,300,000
CALCULATION
NUMERATOR
Actual EBITDA $2,300,000
Target EBITDA $1,850,000
----------
Exceeds Target $450,000
DENOMINATOR
Change EBITDA $650,000 ($2,500,000-$1,850,000)
PERCENTAGE EARNED
Exceeds Target $450,000
Change EBITDA $650,000 ($2,500,000-$1,850,000)
% Earned 69% $450,000/$650,000
BONUS
Potential Amount 40%
% Earned 69%
---
Bonus % Earned 27.6%
Potential Bonus $92,000 $230,000 *40%
Bonus Payment $63,480 $230,000*27.6%
